(In first and third paragraphs corrects to show Lancashire was only, rather than not, exposed to first $40 million of claims, clarifies final quote from Lancashire executive)

By Noor Zainab Hussain

Aug 30 (Reuters) - Property and casualty insurer and reinsurer Lancashire Holdings is only exposed to the first $40 million of claims in its main Bermuda property reinsurance account and does not expect to pay out huge amounts from Tropical Storm Harvey, its head of investor relations said.

The most powerful hurricane to hit Texas in more than 50 years has caused deaths, forced tens of thousands of people to leave deluged homes and caused damage estimated at tens of billions of dollars, making it one of the costliest U.S. natural disasters.

Lancashire, which writes policies for heavy-duty assets such as oil rigs, ships and aircrafts, said its exposure in Texas was that of a windstorm account, which excludes floods - the biggest cause of damage in the state.

The company will only have to bear losses of up to $40 million before its retrocession cover - when a reinsurance company has other reinsurers underwrite part of its insurance risk - kicks in.

The Lloyd’s of London insurer and reinsurer has a retrocession cover of about $200 million, Jonny Creagh-Coen told Reuters.

“It has to be a very big loss before we even start paying losses. Very difficult to say if that potential is there or not,” he said. “For Lancashire, we don’t see a big thing here.”

Air Worldwide, a provider of catastrophe risk modelling software and consulting services, estimates insured losses from Harvey’s wind and storm surge at between $1.2 billion and $2.3 billion. That figure does not include flooding.

Wall Street analysts have estimated insured losses as high as $20 billion.

Barrie Cornes, insurance analyst at Panmure Gordon estimates a 200 million pounds net loss for Lancashire from the storm. Creagh-Coen rejected the figure.

“Most of the area is still in blackout (so) there are a couple of things we need to clarify. But we are pretty comfortable on where we sit in this claim,” he said.

Lancashire, the third-biggest Lloyd’s of London listed insurer by market capitalisation, also writes business via its Cathedral unit, which gives it access to the Lloyd’s market.

“On their (Cathedral’s) treaty account, it’s difficult to say what any claims will be,” Creagh-Coen said.

Lancashire's shares, which have fallen 2.7 percent since the last day of market activity before the storm, were up 0.9 percent at 665 pence at 1146 GMT. (bit.ly/2x3REzK)